High net-worth individuals (HNIs) in India are increasingly prioritizing comprehensive protection for themselves and their dependents through customized term insurance plans. Life insurers are responding to this demand by offering tailored policies designed to safeguard wealth and ensure legacy security.
Affordability and Significant Coverage
One key factor contributing to the popularity of term insurance among HNIs is its affordability, coupled with substantial coverage. Despite offering coverage amounts as high as Rs 5 crore, monthly premiums often range from Rs 3,000 to Rs 3,500. This cost-effective approach has led to HNIs accounting for 25% of the term insurance business in FY23, with Rs 1.75 crore being the most preferred cover amount.
Impact of Tele-Medical Check-Ups
The introduction of tele-medical check-ups has played a pivotal role in a threefold surge in NRIs purchasing term insurance with considerable coverage. The enhanced accessibility provided by tele-medical check-ups has significantly improved the customer experience, with 75% of NRI customers identified as HNIs.
Industry Response and Coverage Options
Insurance industry leaders, such as Rhishabh Garg from Policybazaar.com, highlight the industry’s responsiveness by offering coverage options up to Rs 20 crore. Garg emphasizes that affordability, coupled with expansive coverage, has positioned term insurance as the preferred choice among HNIs, allowing them to manage financial risks effectively.
Factors Driving HNI Interest
Increased awareness of financial security and the desire for comprehensive coverage and tax benefits are driving the growing interest in term insurance among HNIs. The evolving market landscape and competitive offerings that cater to specific needs further fuel this upward trend.
Strategic Considerations for HNIs
HNIs are advised to consider factors such as outstanding liabilities, potential inflation, and upcoming financial responsibilities like a child’s education or marriage when purchasing term insurance. Coverage duration options, ranging from retirement age to extended coverage, allow HNIs to align their life insurance plans with their financial goals.
Riders Enhancing the Safety Net
Customized riders, such as the waiver of premium on critical illness/disability rider, play a crucial role in enhancing the safety net. These riders exempt future premium payments in the event of critical illness or disability, ensuring the life cover remains intact. Riders tailored for estate planning and wealth transfer, such as wealth creation or legacy planning riders, contribute to comprehensive coverage aligned with financial objectives.
